Sending money to your friends via social media is popular among young people in the US and the trend could soon become common in the Middle East.
Singaporean social payments start-up fastacash recently partnered with global money transfer company Xpress Money to launch Xopo, a remittance app that allows users to make cross-border payments via social networks such as Facebook and Twitter and messaging platforms. The service will be available first in the UK and subsequently in the US, Canada and Australia. It may also one day be available in the UAE.
Vince Tallent, Chairman and CEO of fastacash, says that if half the world’s population is on social media networks and messaging apps — with many spending a few hours on them daily — it is only a matter of time before they use these channels to exchange money.
“Our premise is simple. If I can send you a photo on WhatsApp, then why can’t I use it to send you money?” says Tallent, while pointing out that most of the world’s remittances are sent from the US, UK, Europe and the Middle East, so it makes sense to form strategic partnerships in these regions. “What I would say to the financial industry is that the social media companies have been quick to move into payments. It’s only a question of time before the banks and remittance companies start to wake up.”
Launched in 2012, fastacash collaborates with banks, mobile operators, remittance companies, payment service providers, mobile wallets and other financial institutions to enable these transfers. In 2015, it partnered with Visa Europe to bring social transfer capabilities to Visa Europe’s partner banks and also with India’s Axis Bank to launch Ping Pay, the country’s first bank-led social payment app. Fastacash claims its app is the first to allow users to send and receive money around the world via more than one social network.
The rise of social money transfers comes as the business models of banks and exchange houses come under pressure. The advances in technology mean customers are increasingly turning to digital channels. That is pushing exchange houses to develop and evolve quickly.
Sudhir Kumar Shetty, President, UAE Exchange, says digitalisation is a priority this year. “I strongly believe that digital is the future,” says Shetty. “Increasingly more transactions in the financial services space are happening online. Remittances too are inching towards the same.”
UAE Exchange has launched online money transfer facilities in 11 countries and is waiting for approval from the UAE Central Bank to launch it here. Others are taking similar steps. Al Ansari Exchange launched its eExchange portal last October. The web-based solution uses a highly secured gateway to enable customers to transfer money online at competitive rates.
Shetty says the key advantage to digital payments is the convenience of making these from anywhere, along with increased transparency and control over the transactions. Besides, they are easier to regulate, leading to a “healthier financial system”.
Although a majority of transactions are still via cash, Adeeb Ahamed, CEO, LuLu International Exchange, believes the introduction of a variety of payment services will give digital payments the push it needs. “The UAE government has always been at the forefront of promoting everything digital, so I believe there is great potential for such payments systems to develop and gain traction in the country,” he says, adding that once the digital payments platform is set up, it will become easier to move towards the social payments platform.
Ahamed reveals the impact of technology on his business has made them contemplate whether they should stick to their bricks-and-mortar set-up or move towards the online platform or create an equal mix of both.
Banks too are not merely watching the emerging trends from the sidelines. Emirates NBD, for example, introduced the DirectRemit service, which claims users can transfer money to India, Pakistan, the Philippines and Sri Lanka in just 60 seconds to select banks. It was also the first bank in the UAE to offer banking via Twitter.
“Social networks have assumed increasing importance in our daily lives and we believe in an inevitable convergence of our customers’ banking/financial needs and social media activity,” says Suvo Sarkar, Senior Executive Vice-President and Group Head of Retail Banking and Wealth Management, Emirates NBD. “While we don’t see cash replaced anytime soon, the ubiquity and ease of social payments are critical factors in shaping and transitioning the banking behaviour of the young generation.”
Meanwhile, Tallent believes consumers will demand more and more convenience from their financial services providers and this will necessitate a move towards social payments. “The convenience and advantages this brings to end users are too important to ignore,” he says. “It also helps consumers overcome geographic and logistical limitations, as well as provide transaction capabilities to people who may not have bank accounts or plastic cards — the unbanked.”
Bhairav Trivedi, CEO of Network International, agrees the proliferation of payments over social media channels has opened up a new front, but he also cautions that “when it comes to payments, social media does not yet inspire the level of trust and confidence among customers required to do transactions”.
However, Trivedi sees clear synergies and opportunities that will fundamentally change the way people work, communicate and exchange value.”